A 2017 Human Rights Watch (HRW) report refutes claims by Israeli banks that they are required to provide financial services to settlements in the occupied West Bank under Israeli law. HRW analysed Israeli law and international humanitarian and human rights standards applicable to business and found that banks can "refuse to offer a service if that transaction originates, terminates or passes through a settlement as long, as they disclose that they decline to provide services in settlements and apply that policy to all customers."

HRW wrote to the Israeli banks requesting details of their activities in the settlements and explanations about their understanding of the domestic legal framework. Only Bank Leumi and Bank of Israel responded providing brief comments. Bank Leumi said it operates in accordance with the laws of the State of Israel and referred HRW to the Association of Banks in Israel for further questions. While Bank of Israel said that the situation was "complicated and dependent on the circumstances of each and every case on its merits, and therefore, in general, we do not address questions of this nature."

The Association of Banks in Israel declined to comment on HRW questions, however did provide a detailed response to Danish research centre Danwatch for its January 2017 report on investments in Israeli settlements, saying: "[S]etting a policy at a bank, whereby banking services or credit would not be provided in connection with activity in [the Occupied West Bank] constitutes discrimination due to nationality, race, religious group and point of view which is prohibited under the law."

Business & Human Rights Resource Centre invited the Association of Banks in Israel, Israel Discount Bank, Mizrahi Tefahot, First International Bank of Israel, and Bank Hapoalim to respond to HRW's report as well as Bank Leumi and Bank of Israel to provide further comment. The Resource Centre also invited AXA, which holds investments in Bank Leumi, Hapoalim and Mizrahi Tefahot, to respond. Only AXA responded.

AXA is not present and does not do business in the occupied territories. As regards the investments in Bank Leumi, Hapoalim and Mizrahi Tefahot: these are non-controlling, minority investments, that account for a very small fraction (less than 0,1%) of AXA Group's assets under management. Furthermore, we would like to clarify that over 99% of AXA Group’s investments in the three above-mentioned banks are undertaken on behalf of third-party clients via AB Global, a US asset manager listed on the NY Stock Exchange. As a consequence, and given AB Global's fiduciary duty toward their clients, we do not have the legal possibility to impose on them non-financial investment guidelines. Finally, as part of our responsible investment policy we reviewed again our investments in the Israeli banking sector early 2017. After a careful and thorough examination of the situation, taking into account UN Resolution 2334 and the nature of activities of the three Israeli banks, we concluded that these companies do not fall within the exclusion framework of our investment policy.

The activities of Israeli banks in Israeli settlements in the occupied West Bank raise serious human rights concerns. By providing services to and in settlements, which are illegal under international humanitarian law…Israeli banks are making existing settlements more sustainable, enabling the expansion of their built-up area and the take-over of Palestinian land, and furthering the de facto annexation of the territory…When faced with such concerns over their banking activities in and with Israeli settlements in the West Bank, Israeli banks have said that they are required by Israeli law to provide those services. However, Human Rights Watch can find no Israeli domestic law that requires Israeli banks to provide many such settlement-related activities. In other words, Israeli banks could stop many of their settlement-related activities – notably financing new construction, providing mortgages, and operating service points -- branches and ATMs – without necessarily incurring adverse domestic legal consequences…Human Rights Watch does not believe it is possible for businesses to operate in the settlements in compliance with their international responsibilities, due to the inherent IHL and human rights violations that characterize settlements. Human Rights Watch is calling for banks, like other businesses, to comply with their own human rights responsibilities by ceasing settlement-related activities...

...[W]e have duly taken note of your concern with regards to our investments in three Israeli banks. We were contacted in the past by some NGOs on the same topic, and had therefore reviewed it carefully, as we do when we receive questions about our investments. We would like to reassure you that AXA is not present and does not do business in the settlements, which are subject to an international United Nations resolution. The banks you are mentioning, which are under no legal restriction, were carefully examined by the teams involved in the decisions relative to our responsible investment policy. They concluded that these companies did not fall within the exclusion framework of our responsible investment policy, one of the most advanced and transparent in the financial sector. We hope to have reassured you on our investment policy.

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Disclaimer: Business & Human Rights Resource Centre and its collaborative partners take no position on the diverse views presented in linked material by the various commentators, organizations & companies. As with any database, we cannot guarantee the factual accuracy of all the articles & reports we make available.

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